Astana Financial Services Authority (AFSA) Introduces Stablecoin Framework

The Astana Financial Services Authority (AFSA) has introduced its first comprehensive Stablecoin Framework, to take effect from 1 January 2024. It is a pivotal addition to the AIFC Rules on Digital Asset Activities. This framework is developed to ensure the robustness and stability of the digital asset landscape within the AIFC jurisdiction.

Within the Framework, AFSA allows the issuance of only fiat stablecoins backed by a single currency. It includes a Group of Ten currencies (Australian Dollar, British Pound Sterling, Canadian Dollar, Euro, Japanese Yen, New Zealand Dollar, Norwegian Krone, Swedish Krona, Swiss Franc and United States Dollar), RMB (Chinese Yuan) and any other currency agreed with AFSA. The framework encompasses critical aspects such as reference currencies, capital requirements, redemption rights, composition of reserve assets, and disclosure requirements.

The Stablecoin Framework has been developed in accordance with the recommendations of standard-setting bodies, including the Financial Stability Board, International Organization of Securities Commissions, Basel Committee on Banking Supervision, Committee on Payments and Markets Infrastructures, Financial Action Task Force, and Bank for International Settlements.

Moreover, the framework was developed considering best practices of leading regulatory bodies and feedback of current and potential participants gathered during public and targeted consultation periods.

The uses of stablecoins within the Digital Asset ecosystem have multiplied in recent years. As of June 2023, the total market capitalisation of stablecoins across all categories stands at $127.59 billion. Among the various types of stablecoins, fiat stablecoins remain dominant, with a market capitalisation of $119.79 billion. They account for the majority of the market share in terms of both market capitalisation and trading volume. Regarding the crypto exchanges in the AIFC sandbox, the trading volume of stablecoins constitutes the majority of overall trading of Digital Assets.

A key feature of a stablecoin is that it purports to have less volatility than other Digital Assets, allowing it to operate as a transfer of value within the Digital Asset ecosystem.  However, recent history, particularly the collapse of the largest algorithmic stablecoin in May 2022, has shown that stablecoins also present risks that require adequate systems and controls. Therefore, the introduction of the Stablecoin Framework is a significant step in fostering a secure and transparent digital asset environment within the AIFC. By aligning with global standards and considering the best practices of leading regulatory bodies, AFSA re-affirms its commitment to providing a conducive ecosystem for innovation and growth in the digital asset space.

Reference: 

Financial Stability Board (“FSB”) defines stablecoin as “a crypto asset that aims to maintain a stable value relative to a specified asset, or a pool or basket of assets”.

According to the enhancements made to the AIFC Glossary:

a Fiat stablecoin is a Digital Asset whose value purports to be determined by reference to a Fiat Currency or a basket of Fiat Currencies.

The Astana Financial Services Authority (AFSA) is the independent regulator of the Astana International Financial Centre (AIFC), which is established in accordance with the Constitutional Law of the Republic of Kazakhstan “On the Astana International Financial Centre” for the purposes of regulating financial services and related activities in the AIFC. AFSA administers the AIFC Regulations and Rules and is responsible for the authorisation, registration, recognition and supervision of financial firms and market institutions in the AIFC.

Over 2,300 firms from 78 countries are registered in the AIFC. These firms provide banking, insurance, investment, professional and other services. The range of financial services offered at the AIFC is comparable to the list of services available in long-established financial centres of the world, such as London, Hong Kong, Singapore, Dubai and others. www.afsa.kz

The Astana International Financial Centre (AIFC) is an independent jurisdiction with a favourable legal and regulatory environment and a developed infrastructure for starting and doing business, attracting investment, creating jobs and developing Kazakhstan’s economy. https://aifc.kz/ 

Contact information:

Public Relations and Communications Division of AFSA:

+7 (717) 264 73 43; +7 7172 61-37-45 email: [email protected]